The Quadrennial Quandary: Mobile Financial Inclusion on an Upswing but Women Still face Connectivity Challenges

Written by Srinivas Nidugondi, Senior Vice President & Head Mobile Financial Solutions at Mahindra Comviva.

The latest edition of the Global Financial Inclusion (Global Findex) database has been jointly released by The World Bank Group and Gallup. Like its predecessors in 2011 and 2014 respectively, the data set offers a multi-faceted view of how far along global efforts to expand access to financial services have come and how they are likely to shape up.

As always, the key findings garnered from this dataset are collated into a comprehensive report, The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. In brief, the report outlines how adults in over 140 economies access accounts, make payments, save, borrow and manage risk. Interestingly (and as expected), each economy has its own set of successes, challenges and opportunities when it comes to financial inclusion. Consequently, the report, overall, offers mixed results from the past three years. For example, while, on one hand, the global share of adults owning an account currently stands at 69 per cent (a seven percentage point leap from 2014), women (as a customer group) still lag behind men in terms of financial inclusion. As per the report, globally, a mere 65 per cent of women have an account, compared to 72 per cent of men. A seven percentage point gap, no doubt, but, unfortunately, one that has remained static since 2011.

Overall, of course, there is no doubt that financial inclusion has made significant inroads globally. Going forward, the report highlights that the continuous involvement of businesses will be vital for unlocking opportunities to enhance financial inclusion.

The first in the Financial Inclusion series of articles, key excerpts from the report include…

Financial Inclusion is a Vital Facilitator of Global Development

As per multiple research reports, there is an unmissable link between financial inclusion and global development. More succinctly, the increased use of digital financial services, such as mobile money services, payment cards, et all, offers opportunities to manage financial risk, lower the cost of receiving payments, reduce poverty and enhance savings, especially for women.

Examples of Financial Inclusion-Fuelled Development

Account Ownership on an Upswing

69 percent of adults now hold an account at a financial institution or via a mobile money provider. This is compared to 62 percent in 2014 and 51 percent in 2011.

Unsurprisingly, Africa continues to be mobile money’s biggest success story. 21 percent of adults hold a mobile money account. Within this group, nearly half have only a mobile money account, while the other half held an account in a financial institution as well.

An interesting trend witnessed in developing economies is that while account ownership is on the rise, women have, more often than not, been excluded. For example, in Pakistan, account ownership has doubled since 2011 (10 percent was the initial user base). However, this number has increased only amongst men, while it stagnated amongst women. In Ethiopia, account ownership has increased by 18 percentage points among men since 2014, roughly twice the size of the increase among women.

Adults with an Account (2017)

Source: Global Findex database.

Where the Accounts are Held

So, Who Remains Unbanked?

Globally, the figure stands at 1.7 billion adults. This number entails all individuals who neither have an account at a financial institution, nor with a mobile money provider.

The second part of this argument is that since account ownership is almost universal in high-income economies, the unbanked individuals all hail from developing countries. In fact, nearly half live in just seven developing economies; Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan. To put it in perspective, while both claim relatively high levels of account ownership, both China and India are atop the pecking order in this context.

Adults without an account by economy (%), 2017

Source: Global Findex database.

Also, women constitute a majority of unbanked adults-980 million or 56 percent. Women are overrepresented amongst the unbanked in economipercent only a small share of adults are unbanked, such as China and India, as well as in those where half or more are, such as Bangladesh and Colombia.

Adults without an account by gender (%), 2017

Source: Global Findex database.

Lastly, the poorer sections of a country’s population also account for a disproportionate share of the unbanked. Globally, half of the world’s unbanked adults come from the poorest 40 per cent of households within their economy. The other half hail from the richest 60 per cent. However, even this pattern varies amongst economies. In those where half or more of adults are unbanked, the unbanked are as likely to come from a poorer household as from a wealthier one. In economies where only about 20–30 per cent of adults are unbanked, however, the unbanked are much more likely to be poor.

Adults without an account by within-economy income quintile (%), 2017

Source: Global Findex database.

The Unbanked in Developing Economies

Why Are certain Sections Unbanked?

Despite global growth, there still remains a large chunk of the global population which falls through the cracks. This gap is attributed to several factors, ranging from lack of sufficient funds to even religion. For instance, two-thirds of adults without an account at a financial institution cited the absence of adequate funds. Meanwhile, 30 percent of adults said that there is no requirement for such instruments. Cost is another important barrier, cited by 26 percent of unbanked adults. Interestingly, 26 percent do not have an account as they rely on another family member who does. This, needless to say, has been cited more often by women than men. Distance is another factor for 22 percent of adults surveyed. Meanwhile, 20 percent of adults cited the vast documentation required to open an account as a barrier, while 16 percent don’t hold any stock in existing financial systems at all. Interestingly, religion also plays a role, as per 6 percent of unbanked adults surveyed.

Adults without a financial institution account reporting
barrier as a reason for not having one (%), 2017

Source: Global Findex database.

Note: Respondents could choose more than one reason.

Explaining the Unbanked

Women and Mobile Money

Significant growth notwithstanding, disparity in account ownership still exists. Globally, women are still less likely to have access to an account, compared to men. 72 percent of men, as against 65 percent of women have an account, a gender gap of 7 percentage points.

Interestingly, the situation has more or less remained static since between 2011 and 2014, at 7 percentage points. Another notable development is that certain economies that did not have a gender gap in 2014 still don’t (on an average)-but, the converse is also true. Here’s the catch, though, Burkina Faso and Ethiopia are two exceptions to this rule. While both didn’t have a gender gap in 2014, the situation has now changed. This is primarily owing to the increase in the number of accounts in these countries – more amongst men than women, needless to say.

In developing economies, 67 percent of men have access to an account, compared to 59 percent of women.

Adults with an account (%), 2017

Source: Global Findex database.

On the other hand, there is no discernible difference in high-income economies, on an average. However, a few economies are an exception to this rule.

Adults with an account (%), 2017

Source: Global Findex database.

The Gender Disparity Score in Developing Economies

Gender Disparity in High-Income Economies

All in all, while the global digital payments divide is being bridged (albeit slowly), the gender divide is still a very real challenge. Industry stakeholders, are you listening?

About Mahindra Comviva

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